she would like to run for office. after all, she says, what better way to change the world. and that's it for today. have a great week. we will see you next time on fox news sunday. >> this week on the journal >> with the clock ticking, both sides dig in on fiscal negotiations. the president is taking his case to the public. but he's mostly mum on spending cuts. so how should republicans respond? and ahead of january's big tax hikes, companies and investors are cashing out, including one of president obama's biggest supporters. plus as susan rice makes the rounds on capitol hill, we will look at what could make up the national security team in president obama's second term.

>> i am ready and willing and able and excited to go ahead and get this issue resolved in a bipartisan fashion so american families, american businesses have some certainty going into next year. >> i'm disappointed in where we are and disappointed in what's happened over the last couple of weeks. going over the fiscal cliff is serious business and i'm here seriously trying to resolve it, and i would hope the white house would get serious, as well. >> welcome to the journal editorial report. i'm paul. not exactly a meeting of the minds this week between president obama and house speaker john boehner on just where talks to end the fiscal showdown stand. the president, for his part, took his case to the public and repeated his call for a tax hike on upper income americans but made little mention of cuts to entitlement spending.

something the speaker said must be part of any final deal. joining the panel this week, wall street journal columnist and deputy editor dan, and ms. o'grady and washington columnist kim stossel. you are stuck in washington having to talk to all the sources. and you have been working them this week, i know. is the mood as sour as it sounds? >> it is by the end of this week and here's why. republicans came out right after the election and said to the president, you want revenue, here. you want revenue on the wealthy? we will give it to you. let's do this via limbing tax deductions for the wealthy. the president instead of taking that, running it, ceiling a deal, has been out campaigning for tax hikes. and to cap it off, sent treasury secretary tim geithner down to congress this week with this absolutely outrageous proposal that's basically a compilation of everything the president wanted in his budget. it's beyond what he even campaigned for. and as a result i think most

republicans wonder just how serious he is about doing this. they feel things are going backwards. >> that's the way it sounded to me, too. i talk to some senior republicans this week and they are increasingly of the belief that maybe the president wants to back them into a corner that could push them over the cliff and then be able to blame them if you have to recession or for taxes going up on everybody. >> well, i don't doubt that that's what he's trying to do. it's hard to see where the up side is for the president if the economy slips into a recession. we are talking about 2013 having no growth. >> it would be horrible. >> yeah. so it's a little hard to see what the game is. as kim was mentioning, the president wants these tax increases. it seems to me we will go through this sort of scorpion dance the rest of the year. what did the president campaign on? what was the one thing i think most people would say that he campaigned on? that was raising tax rates on the wealthiest, the two top rates. that's the thing that i think is

on the table. and the -- >> but the republicans put that on the table. >> the republicans have put that on the table. >> at least through deductions. debate the rates or deductions. but they are willing to put it on the table. the question is what do the president give the republicans in return, if anything? >> i think that's what the republican position should be. say we have committed to what you campaigned on. if you are not willing to talk about reducing spending, then we aren't going to be able to do a deal with you, and i think that puts the political onus to some extent back on the white house. >> mary, the white house have been republicans fighting among themselves over the no new taxes pledge and glover norquist, the activist in washington that name famously has republicans on record saying i won't vote for a tax increase. are they ending up negotiating with themselves that hurts their position, visa vis the president? >> certainly they are. i think the president is energized by the fact that he thinks, look, i ran a lousy

economy for four years. i left unemployment high. i increased the size of the debt and the deficit. i got everything i wanted. the place is a mess. and look, i got re-elected. so, you know, what's so hard about me continuing to do that and blaming it on them because obviously i'm very good at that. and that's basically where he's going here. and the republicans, i think, are not very good poker players. first of all they signaled that they are kind of really reluctant to go over the cliff, and i think if you are in this kind ever a showdown you have to say, you know, bring it. come on. >> you'll do it. they will get blamed for it, though, if that happens. there's no question. the president is already signaling that. that wouldn't be a pleasant outcome for them. would you say they should suggest to the president they would be willing to do that and then maybe he would give 2nd end? >> i think they have to show that he is in negotiations and that he has to give and they are willing to give and if they just say we are so afraid of getting

blamed for that, of course he's going to roll right over them. >> kim, where do you think the republicans, where should they go here? do they have real options, any other options other than maybe just giving the president in the end what he wants? >> you know, talking to republicans, there's a very firm feeling out there, a strong feeling that john boehner should be given some more time to negotiate and see what he can get. because look, there is an honest belief in the republican party there is a big problem here. if there is an opportunity to do something about the real driver suspending entitlements that they ought to take that opportunity. but i think you see people turning around and deciding what might be a plan b. one thing that came out this week was the suggestion by tom cole, who is a republican from oklahoma, saying maybe we should just agree to these middle class tax extensions, just sign them, give them to the president and that's what he says he wants, get that off the plate and then let him take all of the political fallout for everything

else that comes. the economic hit from the top rates, the sequester and everything else. >> he would still end up having to do something on the spending cuts that are coming and on the debt limit. dan, very briefly. >> yeah. but basically we are back to where we were in the 2011 neglect yes, sirs. the republicans committing on tax cuts and tax increases and the democrats promising to do something on spending later in 2013. it's very hard to see that that's going to get resolved by the end of the year. >> all right. what a mess. when we come back, the prospect of the tax cliff is already affecting the behavior of some companies and shareholders, including one of president obama's biggest backers who is cashing out before rates go up. the details are next. erything. share "not even close." share "you owe me..."

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>> the president who has covered the backs of businesses. a president who understands what the private sector needs

to succeed. a president who takes the long view and makes the tough decisions. and that's why i'm here tonight supporting president obama. >> paul: that was costco co-founder and former ceo at the democratic national convention in september, saying that president obama will be better for business than mitt romney, but just before that second obama term begins, he's getting a dividend. mr. senegal and the rest of the costco board voted this week to give themselves a special dividend, a 3 billion dollar christmas gift for shareholders that will allow them to be taxed at the current rate of 15% rather than next year's rate of over 40%. and costco is just one of many companies making these one-time cash payouts in a move that will save stocks holders like senegal unless in dividend taxes. and so, mary, turns out maybe taxes do influence investor behavior. what's the meaning of the

great cashout of 2012? >> well, don't tax you, don't tax me, tax the guy behind the tree. >> paul: russell long, former late senator. >> exactly. and what you see here are very wealthy people who can, you know, engineer ways to avoid taxes, meanwhile, what he's-- the medicine he's suggesting for people who are starting to do better, people who say, make $200,000, maybe working their whole life. they're the ones who are going to get hit with the obama taxes and really, i mean, you look at that and you think a normal human being with, you know, would be ashamed of that lack of intellectual honesty, should be. >> it's fascinating economic dri that costco is borrowing the money to pay this dividend. now, usually when companies pay dividends, it's out of earnings, right? >> yes, retained earnings, in this case, they're borrowing, taking on more debt, not to invest in the business in the future growth, but for a

one-time equity pay out. >> and to worry about interest rates are low thanks to ben bernanke. >>, but this shows the tax rates combined with very low bore heing costs and instead of investing in growth, you're investing in tax avoidance. >> and russell long said, i've come to the conclusion if you're going to have capitalism, you're going to need capital. >> goes to the heart of this, right? >> pure genius, except what's happening here is that capital could be invested in productive businesses or used next year is being pulled out of 2013, into 2012 so it can be realized as a profit and that capital will probably then be put in cash accounts or regional investors because these people don't trust going into 2013. they're just taking economic activity out of that era. >> so what's the economic impact going forward next

year? >> why, it's dire for 2013. they really do, they're sucking the air out of 2013 and back to the point we were talking about, the negotiations in washingtons. the at some point, somebody, maybe the republicans have to speak up ab defend the real economy against the sort of policies they're talking about down there. >> they get wrapped up in the insider baseball and we're guilty of that, too, and playing to that and people out there. what they really want to know is the economy going to grow or not. if you're increasing taxes on dividend, you get less capital and dividends and then less growth for the economy and less revenue for the government. >> well, a lot of people worry about the many years that japan has been in a slow growth environment, but they've kept interest rates very low in japan, but the problem is, government is too big. that's why japan has not been able to start growing again. and this is the path that the u.s. is certainly on if we don't change that dynamic. >> paul: kim, is there any

recognition about this in washington or is it all -- i mean, do you hear any of this discussion or do they really believe, certainly, the white house and the treasury, that tax rates like this don't matter, at that ultimately-- >> no, they do to a degree. if you talk to the officials iran up, come on, so we're going to raise the rates, what is fascinating to put it in the bigger context of the debate about tax revenue, the economists have the static view, you've got x-amounts of capital gains income and you get 20% more tax revenue. >> you don't, because people decide to shelter it. they do their transactions the year before, when the amount is less. and so, all of these numbers that the white house is counting on and sort of rubbing its hands together hoping to get. they're not going to get anywhere near that because wealthy, as mary said. are very good at making sure the tax man can't get their hands on it.

>> here is the thing i don't get about the president's calculation politically. if you look at the reagan's presidency and clinton's, the one reason they had successful terms, they had growth. clinton 4% growth. more than 4% and reagan chose to that. that buoyed public sentiment that helped their approval ratings throughout enormous revenues that they could use. if obama gets a recession in the second term after the slow growth of the first term, he's dead in the water. he can't afford that. >> yes, but ball there's a whole economic school, we call it keynesian, which says that when the economy is slow and not growing, government has to step in and play the role of the engine of growth, by spending money. this is something that the democrats believe in religiously, and they think that the only way to get the economy growing again is to spend a lot of money from the government. that's where the problem comes in. >> all right. when we come back. as he prepares for a second term. president obama faces the

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. . >> jamie: susan rice has done a great job as our be ambassador to the united nations. and of course, this decision about my successor is up to the president. >> paul: and the secretary of state hillary clinton reacting to talk to president obama may nominate u.n. ambassador susan rice to replace her. rice made the rounds on capitol hill on tuesday in an attempt to ease republican concerns and smooth the way for potential cabinet nomination, just one of the positions that president obama will have to fill on his

national security team in his second term. we're back with dan henninger and mary anastasia o'grady and bret stevens joins the panel. is there a case for susan rice as secretary of state. >> senator john mccain and susan ayotte feel they have a case again her in relates to benghazi before the election because susan rice after the incident happened, that the murder of ambassador stevens went on the sunday morning talk shows and said that the demonstrations were related to the islamic video that some kid in california made. and what they want to know is why susan rice, u.n. ambassador, was sent out there and why she was sticking with the story that was crumbling almost as she was saying it. >> paul: the intelligence talking points and not trying to be dishonest. >> two points, they want to know whether the administration was politicizing or trying to protect the president from an

ugly event in libya just before the election, and second, the more serious policy issue is what exactly was the administration, the white house and the state department, doing during that period when this big fire fight was taking place in benghazi? and i think the white house has been trying to sweep this issue away in the wake of the election and i think these senators are entitled to keep pressing to find out what happened then. >> paul: so, susan rice's nomination becomes an opportunity in dan's telling to try to get at that story, that libya story. >> it's actually an opportunity to get at what the nature of the obama administration foreign policy is, paul. and susan rice in some ways encapsulates a strain in democratic policy thinking that goes way back, a story that's actually told by samantha power, a close aide to president obama and wrote about genocide in with a randa. and susan rice is state department that makes a cameo appearance in the book, quoted asking, if we call what

happened in rwanda genocide, how does it play for us in what were then the mid term elections of 1994. well, there's a pattern here as we see. one is a reluctance to have america be engaged in certain issues, and the second one is politicizing foreign policy issues because they might hurt the president's political stance. >> paul: and you want a secretary of state, if you're-- well, the american people want a secretary of state who is some more independent judgment and not thinking so much about the politics, is that the point? >> that would be one thing that you would look for in the secretary of state. >> paul: sorry for stating the obvious. >> the national interests and not the president's mid term when it comes to iran and north koreas of the world. >> paul: is that enough to stop, mary the president from getting the secretary of state that he wants and with john kerry mentioned the senator from massachusetts as the alternative to susan rice, would he be any better. >> i'm surprised that the

president is pushing so hard from here. quite apart from whether she was politicizing events she shouldn't have been, she has a reputation of not being a very good diplomate n that job you have to be able to persuade people to come on your side and apparently she tends to. >> rough edges. >> insult people and she's a little bit abrasive, but, john kerry is also very troubling. his track record over the years, not as a diplomate. he might be very good at going to dinners and so forth, but, you know, for example, in latin america, when he ran for president, he was backed by thomas boardhey a former in nicaragua and, another's involvement in the office in honduras were bringing a friend of chavez back to honduras and that's cost a lot of-- >> and the case for susan rice, she's better than john

kerry. (laughter) >> do you think that the president is going to nominate susan rice and do you think if he does that she'll get through? >> i expect yes on both counts, but i have a suggestion for the president, he should nominate colin powell, former secretary of state and supporter to be either secretary of state or secretary of defense, he could fill both jobs. >> all right. >> all right. we have to take on want to try to crack it? yeah, that's the way to do it! now we need a little bit more... [ male announcer ] at humana, we understand the value of quality time and personal attention. which is why we are proud to partner with health care professionals who understand the difference that quality time with our members can make... that's a very nice cake! ohh! [ giggles ] [ male announcer ] humana thanks the physicians, nurses, hospitals, pharmacists and other health professionals who helped us achieve the highest average star rating among national medicare companies... and become the first and only national medicare advantage company

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>> time now for hits and misses of the week. first a, hit to you. >> a hit to the u.s. supreme court for throwing open the door to another constitutional challenge to obamacare. the high court agreed to a request from liberty university to reopen its lawsuit against a main provisions of the health care law, arguing they're unconstitutional on the religious grounds and this of course goes to the point about the law requiring employers to

provide contraception and no idea how far it will go, but the court deserves credit for parts of the hearing. >> thanks. >> bret? >> this is a miss to china's people's daily largest newspaper i think in the world which picked up an item in the american media called kim jong un, the media, and came from the satire cal newspaper "the onion" sometimes things were lost in translation and this was irony. >> that's funny. >> the largest black hole ever seen in the galaxy, the size of 77 million suns, it's 250 million light years away from the earth and it's incomprehensible. what i like most about it though, it's rather humbling. >> paul: i thought you were describing washington. >> that's not humbling, fright any. >> paul: but it is